With fiat currency, we have many systems for dispute resolution and restitution. They are not all perfect but they work often enough that people still have faith in the system.
Most people do not have the risk tolerance to use a system where one typographical error can irreversibly lose your life savings (for example), the product of decades of work.
The trust built into crypto is rock solid, the problem is that it's scope is so narrow and limited that even after a decade it's still searching for a major trust problem to solve. In this case you cannot reverse crypto payments because there is no oracle that can do it. You would need to find God's own API for reality.
I was however totally wrong about the future (monetary) value of crypto in early 2018. I guess sometimes it pays more to know less.
Edit: Also of course every single crypto org obfuscates and is opaque as possible about the oracle problem. I'd venture that most investing in the space don't know what it is.
You can have decentralized systems but because monetary wealth accumulation is centralized by nature, and any decentralized system that introduces monetary accumulation and inflation reverts to a centralized state.
A good example of this is Bitcoin. Those with the most liquid currency (fiat) can buy more hardware that centralizes wealth. You simply cannot have an MLM scheme without a pyramid.
Your entire post is about inevitable centralization but that is not the oracle problem. The oracle problem is about providing access to real life data on the blockchain, but the issue is that you still need to trust someone to provide that data. Maybe I am misunderstanding you but I don't get how that by design leads to the total financial destruction of most participants?
I find it kind of fascinating to, for (made-up) example, place real-money bets not on the future of the price of gold but on what the contract at $ADDRESS will say it is in the future. Do people understand what they’re actually betting on?
I suspect deep understanding and clever interpretations of those specifics in crypto will be rewarded. Though crypto has the added excitement that, as here, poor understanding and interpretation result not just in loss of value but it’s destruction!
However the difference is that we can abstract away the oracle from the rest of the value transfer mechanism.
For example if we want to bet on the winner of the Super Bowl, in the old days we’d have to find a trusted third party to hold the money for us. Essentially a bookie. Finding a trusted bookie, especially one who’s licensed in multiple jurisdictions is really hard.
In contrast, we can probably find a trusted “oracle” for the Super Bowl much easier. For example AP is extremely trustworthy (largely because they’re not in the legally dodgy business of sports betting). As long as AP cryptographically signs the outcome of the game (as they do for all HTTPS served content), we now have a highly trusted oracle. We can handle all the other mechanics around betting and payoffs inside a trustless smart contract.
In fact we can take this even a step further and use multiple trusted sources in a multisig setup. The chance that AP, ESPN, NBC sports and Google all collude to lie about the Super Bowl is extremely small.
So while the oracle problem means we can’t completely eliminate the need for trust, it can drastically reduce the surface area of risk by abstracting away the informational layer from the value transference layer.
The bounty in crypto is only in cracking whatever chosen cryptography, and this is the very heart of crypto's provably rock solid trust. This bounty is worth trillions, but we known with a (very) high level of certainty that no one can claim it. You would have to have broken cryptography, or developed a sci-fi level computer chip in total secret.
How much can you trust a handful of news sources when the bounty for gaming them reaches the billions or hundreds of billions in value? What kind of person suddenly wants to become an editor when they get to wear one of the rings of power? (sorry I've been reading LOTR lately)
There is a simple calculus here (and everywhere) that shows that as the value of trust grows, so does the value of breaking that trust. Crypto solves this by making the cost of breaking that trust far outside human's capability. It probably would be be asking too much to introduce an element that suddenly makes that cost practically obtainable compared to cracking crypto.
I looked into this use case before and came to the conclusion that it can't work because TLS is not non-repudiable. Once the initial public-key handshake is finished, the rest of the session uses a symmetric cipher. Because anyone with the symmetric cipher's key can encrypt their own data with it, you could encrypt your own spoofed response from the server in any transcript of the session.
https://crypto.stackexchange.com/questions/29751/are-https-w...
One solution to this is to use the site's public key to sign a Web Bundle instead of using TLS:
https://wicg.github.io/webpackage/draft-yasskin-http-origin-...
Web bundles can be served from any origin (and I'd imagine can be verified by oracles) as the data itself is signed. However, this requires the server to use web bundles in the first place, which likely isn't happening any time soon. Mozilla considers the proposal harmful: they expect Google will serve the majority of web bundles, allowing them to see what sites the user is visiting.
https://github.com/mozilla/standards-positions/issues/264
https://www.ghacks.net/2020/08/30/google-proposed-web-bundle...
While I will concede the example I give above is an extreme edge case, I would also argue that “who won the super bowl” is also an overly simple example.
Video is better explanation than the repos.
https://m.youtube.com/watch?v=HnrFsekayrM
So it could be done. Tho it would require the server to add support.
Repos: https://github.com/tls-n
Anywhere that it is legal, it is significantly easier than dealing with any blockchain. What you've stumbled upon is the reality that the only feature cryptocurrencies provide is opaque law enforcement, and that feature has a timer. Why would it be any easier for a blockchain to be licensed in multiple jurisdictions? The only difference is that the blockchains are almost definitely not licensed. I'm not sure what the statute of limitations is, but I feel like a blockchain holding accounts of illegal gambling is a pretty weird thing to want to create immutable records of, unless you're the FBI.
You can't sue a typo.
I don't need to sue as long as I get my money back.
Sometimes banks freeze international wires until the government investigate the source of the funds to make sure they are not funding terrorism, this happen to any sum higher than $5k in my country for example. I just wish to never be in such a position.
This happened to me when purchasing a house in another country.
If crypto is to be legitimized, the government isn’t simply gonna say, too bad, the stuff we think is absolutely necessary to the point we suspended civil liberties for, that stuff we will ignore for you.
Whether you agree with what the govt is doing or not, they aren’t gonna stop doing it because it’s crypto.
Missing the point.
People need to look at this as like chartering a 17th century galleon. It sank. Gold was lost at sea, unreachable by todays tech. Maybe in 200 years someone can crack ECDSA and recover it.
Not everything needs to be sanitized for one’s safety.
Also the current system at least has the potential to be improved, maybe. While irreversibility is baked into the ideology of many (not all) proponents if crypto.
Did you mean reversibility? Because otherwise you're agreeing with me: I'm saying irreversibility is easy, often the default with crypto Yes, that is what I am saying. In traditional banking reversibility is easier, and (mostly) the norm for situations of standard human error.
In the case of this particular contract a limited form of reversibility is even what was intended, but that doesn't matter. It's a system that doesn't allow for honest error.
For some, that's a feature. For the vast majority required to take smart contracts mainstream, that is not a feature. Better error resistant reversibility can be built, and that's when things may become attractive to more people. But, again, many proponents view irreversibility as a feature so it's not primary consideration when building things.
However, it's going to take more than 150 calls and a lawyer to hard fork the ethereum chain to roll back this contract.
Perhaps a class action lawsuit can force the auctioneers to pay back the money despite not having access to it themselves. Either way, there's literally no way for the misdirected cryptocurrency to ever return.
You are replying to somebody who said literally the opposite: "They are not all perfect"
How is the average person expected to feel comfortable doing it?
Without deep knowledge of the crypto space, and excellent operational security pratices, putting a significant amount of money into these projects is a risky prospect.
For many people that's not a sensible trade-off.
FWIW the risk profile is different than interacting with something like WETH contract, which has had an $10+ billion USD open bug bounty for long time frame.[1]
[1] https://etherscan.io/address/0xc02aaa39b223fe8d0a0e5c4f27ead...
If you have basic common sense though you'll probably be ok.
If the typical NFT buyer has their 'Ape' stolen they have to spend tens of thousands of dollars buying it back.
Thought experiment: a bug is exploited tomorrow which locks forever $50 billion worth of ETH, including of prominent VCs/users/exchanges.
You will see suddenly how consensus crystalizes to do a hard fork reversion of the exploit.
Close, but not quite. It's not a democracy, it's a plutocracy. Things are only reversible when those few who hold the majority of the wealth are impacted.
In this case, on a layer 2, the contract code could be updated, but only if those with locked ETH vote for the upgrade to be processed. Better yet, the Layer 2 could allow ETH to be withdrawn from the contract by the owners and the contract itself could be deleted.
I think the general, technically-informed public often miss the distinction between Layer 1 and Layer X and how they differ in the need for decentralization and censorship resistance while still providing users with security.
If you work in the space you realize only a tiny fraction of wealth gets lost to bugs. This $34M is roughly 0.02% of the wealth locked in smart contracts ATM.
But when the alternative is a dictator arbitrarily seizing/taxing your money, devaluing it through poor economic policies, the risk doesn't seem so bad eh?
> But when the alternative is a dictator arbitrarily seizing/taxing your money, devaluing it through poor economic policies, the risk doesn't seem so bad eh?
I'm skeptical that reducing (at the margin) the pressure to transact via (and thus expand use of) free society's institutions is a particularly good side effect.
This might be true without mattering much -- most people don't have decades of savings. If you're not willing to lose the product of decades of work, but you never have more than a year worth of savings, what does your unwillingness mean?
But crypto should become smarter for real world use case than just following "logically right" rules like some rescue protocol that without a receipt signal, it gets rolled back.
<https://bam.kalzumeus.com/archive/no-payments-are-final/>
> Of course wires are reversible. They were not designed by children, but by professionals who live in a society which has systemically important institutions, and in the event of malfeasance or mistakes society does not tolerate a bank failing or a state missing payroll simply because someone said “no takesies-backsies” fast enough.
> Mistakes happen! By, conservatively, the hundreds of thousands daily across all payments systems, millions depending on your definition of mistake. Wire transfers, like almost all payment systems, explicitly contemplate them and have a sociolegal ritual to quickly reverse them.
> The ritual is called “hold harmless” and comes from a soft guarantee about the wire transfer ecosystem, which is that transactions are largely between sophisticated counterparties acting in good faith, intermediated by institutions whose probity is almost sacrosanct. Importantly, wires are in expectation worth having a human in the loop for; that is very not true of most payments.
> It took the combined forces of several agencies of the federal government more than five years to reverse ~$4.5 billion in Bitcoin transaction
Unlike the Bangladesh Bank hack, for example, which they were unable to reverse.
A better summary might be "transactions are reversible in more cases than you would expect."
Also, transactions that aren't reversible at a low level are often reversible at a higher level in the stack.
And of that hack, I think something like 90% of the transactions for stolen money were reversed, but a significant portion got through because of the timing.
edit- and IIRC the whole thing was caught because of a typo?
Taking any one scenario where it didn't work out that way is highly selective cherry picking. There is not functional equivalence between "almost always impossible" and "almost always possible".
For the actual topic, I don't have any respect for these ICOs/mints/[newest renaming], they're shameless cash grabs with 98% marketing and 2% upwork-tier code. However, you can burn a million quid; I don't think it's a big deal that you can burn 34 million in digital currency due to extreme negligence.
KLF much?
That's fair, I just see lots of discussions where single examples are used to (often literally) say "that's no different from other finance".
And I agree reversibility can be built for crypto, it's just that right now that is not the norm, and defi probably won't see wide adoption until that changes a bit.
Elaboration: https://news.ycombinator.com/item?id=31139114
Now try the same scenario when you’re an ordinary Schmoe who wired money to an obvious scammer, and then tell me whether you still believe Patrick’s model of the banking system as a giant kumbaya circle run on gentlemen’s agreements to Do The Right Thing.
Now, imagine this: an error in a transfer contract locks away funds, not only from victims, but also from phishers. What a beautiful world to live in.
The destination of a fraudulent wire will be known, but that money is practically unrecoverable if it takes another hop or gets withdrawn.
I don't want the later for anything I consider a large financial transaction.
> The unforgiving-ness and irreversibility of cryptocurrency are the reasons that it will never gain significant adoption by “normies”.
Exactly. Such that bank / wire transfer, didn't take off or gained significant adoption by normies?
> With fiat currency, we have many systems for dispute resolution and restitution. They are not all perfect but they work often enough that people still have faith in the system.
Chargeback fraud for both the consumer and the merchant is good as well? Is that why when the payment processor encounters tons of friendly fraud in a merchants account they lock up your account and you're unable to accept payments anymore, effectively killing your business.
The bank doesn't even know if the chargeback is fraudlent or not and will take the money from you regardless of you wasting time countering the disputes to prove that it is fraudlent. Thus, it hurts both the merchant and the consumer and that system can be abused.
> Most people do not have the risk tolerance to use a system where one typographical error can irreversibly lose your life savings (for example), the product of decades of work.
Yeah, most businesses and banks are doing just fine with the reversibility of wire transfers aren't they? [0]
ACH has reversal built in. Wire transfers are harder but there are remedies through the legal system. In neither case is the money simply locked up and never usable again.
>The bank doesn't even know if the chargeback is fraudlent or not and will take the money from you regardless of you wasting time countering the disputes to prove that it is fraudlent. Thus, it hurts both the merchant and the consumer and that system can be abused.
Merely because the US system of handling chargebacks is dogshit and your companies have taken to making processes so unpractical that chargebacks are common practice. European banks perform 2FA checks for online purchases, and chargebacks are harder to execute, while still doable.
But sure, throw the baby with the bathwater, the bath, the house and the city's water system because you forgot to decrement a counter in a shitty contract.
If such insurance/service guarantees are of interest to the market, they will be provided.
The weird thing is people associate Visa transactions with business that are real legal entities that have contracts with Visa and you could sue, but as soon as you say Bitcoin they assume every transaction is like a Nigerian prince scam. These associations are the result of effective marketing by people who want you to feel that way.